Lake Urmia in Iran has undergone catastrophic desiccation due to increasing anthropogenic development, especially in the agricultural sector. A paramount national goal is to restore the lake to its former healthy condition, but corresponding water governance and restoration efforts have encountered various, mostly human-related, challenges. We argue here that these challenges stem from lack of awareness and insufficient consideration of the local social conditions and the subtleties of human-water interactions, which we collectively refer to as socio-hydrological barriers. Ignorance of such socio-hydrological barriers can lead to policy efforts that are mismatched with local realities and, thus, ineffective lake restoration efforts. This study, therefore, focuses on identifying and teasing out how various socio-hydrological factors influence the anthropogenic drought and water governance efforts using the case of Lake Urmia. To this end, a series of interviews with farmers in the lake basin and with specialist staffs in Urmia Lake Restoration Program were conducted and analyzed. In addition, broader strategies for improving the region’s water governance are identified and suggested based on the lessons learned. Although the current study is placed-based, the insights generated here can be relevant for similar cases in the Middle East and beyond that are vulnerable to anthropogenic droughts.